Hastings District Council’s Long Term Plan is still to be formally adopted, but the rate-setting decisions are effectively made.

The headline news is that average rate rises of 19% for the 2024/25 year, compared to the other option of 25%, were unanimously agreed upon by councillors last Tuesday, along with a resolution to halt or reduce funding on “nice to have’’ projects. Those projects include an upgrade to the Hastings Library and Art Gallery, Splash Planet, Tomoana Showgrounds and planned walking and cycling initiatives.

What didn’t come up at Tuesday’s council meeting, but is also in the draft Long Term Plan is a $201 million spend on “new infrastructure for growth’’.

This has been described as ‘run of the mill’ council business, but there is an acknowledgement that it presents a risk to ratepayers should the growth HDC staff forecasts not come to fruition. 

The draft Long Term Plan reads: “In this 10 year plan Council proposes to spend $201m on new infrastructure to support growth. This is supported by budgeted revenues from Development Contributions of $161m. 

“The timing of when Council invests in the new infrastructure is crucial to ensuring it is the growth community, not existing ratepayers, who pay for this additional growth infrastructure.” 

Councils have to try and anticipate growth and develop or install infrastructure accordingly.

However, there is a fine line between planning for the future and property speculation.

In the instance of the planned $201 million to be spent on development infrastructure, HDC admits it will have to borrow $40 million to make up the anticipated shortfall.

“Council needs to fund improvements to roads, drinking water supply, wastewater and stormwater networks, as well as provide additional greenspace to support household growth in the district,’’ an HDC spokesperson said.

“These improvements provide the additional capacity needed for infill housing as well as new greenfields developments in areas such as Iona, Brookvale, Howard Street etc. as well as for servicing industrial areas such as Irongate and Omahu Road.

Councils collect ‘development contributions’ from developers to pay for this new infrastructure. However, as Council explains …

“Where there can be an imbalance, and risk to the community, is around the timing of when Council builds the infrastructure, when the development occurs and when the development contributions are actually collected.

“What we are saying is that over the next 10 years we have identified $201m of infrastructure that needs to be built, but we are only expecting to collect $161m in development contributions over the same period. This means that at the end of 10 years we will still have infrastructure that has been built where we are relying on future growth to provide the funding which means we must borrow to fund the difference.

“This is normal, however the balancing act is to ensure we have not paid for too much too far in advance.”

“Each year we budget for an amount from development contributions. If, as has been the case this year, we collect less due to there being less activity in creating new sections and homes we have less money to help pay for new infrastructure. 

“If we went ahead and just built the infrastructure we would have to borrow more and will therefore incur higher interest costs to fund the extra borrowing.”  

Public Interest Journalism funded through NZ On Air

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